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13
June 2018
 |
Growth(The
Total Investment & Insurance Solutions)
Fitch
Ratings today raised India growth forecast for 2018-19 to 7.4 per cent from 7.3
per cent, but cited higher financing costs and rising oil prices as risks to
growth. For 2019-20, it estimated the country to grow at 7.5 per cent.
We
have revised up our forecast for 2018-19 growth to 7.4 per cent from 7.3 per
cent in March. However, higher financing costs (stemming from monetary
tightening and higher market premiums) and rising oil prices should limit the
upside to growth, Fitch said in its Global Economic Outlook.
The
economy grew at 6.7 per cent in 2017-18 and 7.7 per cent in January-March
quarter. Fitch said the Indian rupee has been one of the worst performing
currencies in Asia this year, although the depreciation was more muted than
during the 2013 taper-tantrum episode.
India
has better macroeconomic fundamentals than in 2013 and very low foreign
ownership rates in the domestic government bond market, but the current account
deficit has been widening as a result of rising oil prices, reviving domestic
demand and poor manufacturing export performance, it said.
Last
month, US-based Moody’s cut India’s growth forecast for
2018-19 to 7.3 per cent from 7.5 per cent citing rising oil prices. Fitch also said the near-term global growth
prospects remain robust despite rising trade tensions and political risks.
Global
trade tensions have risen significantly this year, but at this stage the scale
of tariffs imposed remains too small to materially affect the global growth
outlook. “A major escalation that entailed blanket across-the-board
geographical tariffs on all trade flows between several major countries would
be much more damaging,” says Brian Coulton, Fitch’s Chief Economist.The Total Investment & Insurance
Solutions
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